Consumer prices in the US rose 0.2% in October compared to September, and 0.3% excluding energy and food. This was in line with expectations in both cases. However, it is becoming evident that inflationary pressure is declining very slowly. The data does not argue against further policy easing by the Federal Reserve, but could support those who want to slow the pace of rate cuts, say Commerzbank economists Dr. Christoph Balz and Bernd Weidensteiner.
The Fed will make a 25 bp cut in December
“The US consumer price data for October is not disastrous, but it also does not show clear progress. This applies in particular to the underlying rate, that is, the inflation rate excluding volatile energy prices and food, which provides a better indication of the trend. Here, the monthly rate was 0.3%. This was the same as in August and September and too high given the Fed’s inflation target.”
“In fact, consumer prices excluding energy and food rose at an annualized rate of 3.6% in the last three months, meaning that momentum has picked up again. However, there have been several such phases in the “These turned out to be only temporary and the year-on-year rate tended to fall further. Therefore, we would not yet proclaim the end of the downward trend in inflation this time either.”
“However, it remains to be seen whether the situation will ease again this time. In any case, the figures support our assessment that inflation in the US will remain above the central bank’s long-term target. This applies “even more so in light of the emerging policy of future president Trump, who is leaning heavily on tariffs and reduced immigration, which would lead to a tightening of the labor market.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
